US backs Chevron in dispute with Cyprus over huge gas field

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LONDON, Sept 1 (Reuters) – Washington has been embroiled in a dispute between Cyprus and international firms led by Chevron over how to develop a huge offshore gas field, backing the U.S. company’s plan to link it to neighboring Egypt, two industry sources and a U.S. Sources reported this information on Friday.

The Chevron-led ( CVX.N ) consortium proposed connecting the Aphrodite gas field to Egypt through a subsea pipeline and existing infrastructure, where the gas could be sold on the domestic market or liquefied and shipped to Europe, which has largely been cut off. Russian supplies.

Cypriot Energy Minister George Papanastasiou confirmed the government had rejected the latest plan, which scrapped an earlier proposal to build a floating gas processing plant at the field, located 160 kilometers (100 miles) southeast of Cyprus.

“The change has been rejected. The expectation of the Republic of Cyprus is (that) the consortium will respect the issues mutually agreed by the parties in 2019,” Papanastasiou told Reuters.

The partners have engaged in a new round of talks with the Cypriot government, Israel’s NewMed ( NWMDp.TA ), a partner in the Aphrodite field, said earlier this week.

The U.S. is backing Chevron’s plan, believing it will help get gas to market faster and with a lower carbon footprint because it doesn’t involve building major infrastructure, according to a U.S. source.

“Connecting (Aphrodite) to Egypt will help them peak domestic consumption in the summer, add stability and reduce tensions in the region and allow exports to Europe,” the US source said.

The Biden administration is “making a distinction between expensive and unnecessary infrastructure projects” and less labor-intensive interconnections that are necessary for the economy to transition to cleaner forms of energy, the source said.

Aphrodite, discovered more than a decade ago, contains an estimated 124 billion cubic meters of gas. Chevron partners in the field with NewMed and Shell ( SHEL.L ).

Its development would give an important boost to the Eastern Mediterranean gas basin, which has attracted huge investment in recent years, especially in the wake of Russia’s invasion of Ukraine as Europe seeks to replace Russian fossil fuels.

Nicosia objected to Chevron drilling three production wells instead of five and avoiding building a floating production unit on top of the field, according to two industry sources.

A Chevron spokesperson said the consortium is working to advance the Aphrodite project.

“We have submitted a modified development plan to the Cypriot government, which we hope will lead to the development of the Aphrodite field and the supply of gas to the Egyptian and global markets through the existing LNG (liquefied natural gas) plant on Egypt’s north coast.”

“We believe it is important to rapidly develop Aphrodite to benefit Cyprus, the Eastern Mediterranean region and the European and other international markets,” Chevron said.

Editing by Mark Potter and Leslie Adler

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Ron has covered the world’s top oil and gas companies since 2014, focusing on their efforts to transition to renewable and low-carbon energy and the sector’s turmoil during the COVID-19 pandemic and following Russia’s invasion of Ukraine. He was named Reporter of the Year by Reuters in 2014 and 2021. Prior to Reuters, Ron reported on New York equity markets after the 2008 financial crisis after covering conflict and diplomacy for AFP outside Israel in the Middle East.

Timothy reports on energy and environmental policy and is based in Washington, DC, his coverage ranges from the latest in nuclear energy to environmental regulations, US sanctions and geopolitics. He has been a member of three teams that have won Reuters Journalism of the Year awards in the past two years. He is happiest outdoors as a cyclist. Contact: +1 202-380-8348

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